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LSCU letter on taxation attacks Subchapter S banks

TALLAHASSEE, Fla. (8/9/11)--A letter to the editor of The Tallahassee Democrat from the League of Southeastern Credit Unions (LSCU) attacks banks' Subchapter S agreements while pointing out the hypocrisy of bankers' claims that credit unions' congressionally mandated tax-exempt status is a "tax loophole." "This is the same argument the banking industry makes when it wants to deflect its inability to serve consumers and small businesses," wrote LSCU President/CEO Patrick La Pine in the article published Sunday. "The credit union tax exemption was established by Congress in 1934, affirmed by statute in 1951, and re-affirmed in 1998," he said. The letter is in response to Florida Bankers Association CEO Alex Sanchez, who called for Congress to close the tax-exempt status of credit unions in an article in the newspaper on Aug. 2. "This is not a tax loophole," La Pine added. "Subchapter S corporation banks receive a similar tax exemption to that of credit unions." He noted there were 2,300 Subchapter S banks, including 45 in Florida. "Sanchez's argument is hypocritical when members of his association receive a similar benefit to credit unions and he leaves that out," said La Pine. La Pine also noted that Florida credit union members enjoyed $300 million in benefits through lower interest rates, higher savings rates and lower fees last year. And he pointed out that Florida has the second-highest bank failure rate in the nation. "Not one Florida credit union has failed during this same period. Credit unions have money to lend and stand ready to help move Florida's economy forward," he concluded. LSCU serves credit unions in Florida and Alabama.